Focus on interest rates due to deregulation
Expectations for rebuilding in the metropolitan area appear to be dwindling.
Variables such as supply cliff and monthly rent trends
Real estate agency in the Banpo area. The picture and the article are not related. [이충우 기자]
After the general election, the real estate market is expected to continue in a ‘box market’ with no significant decline or rise. This is because deregulation, which was a variable that had a major impact on the market, is inevitably going to be difficult due to the overwhelming defeat of the ruling party, and the problems of interest rate fluctuations, supply shortages, and financial insolvencies real estate. (project financing, PF) unchanged in the current situation.
However, Seoul’s rebuilding market and the local housing market, where there were expectations of deregulation, might be hit somewhat. In the long term, there are many predictions that increased volatility due to the monthly rental market and a reduction in supply could emerge as a major variable.
According to the Korea Real Estate Agency on the 12th, apartment sales prices in Seoul have been rising for the past three consecutive weeks, and rental prices have been rising for 47 weeks.
However, it is not clear whether the current price rebound will lead to an upward trend. This is because although the volume of Seoul apartment transactions, used as a leading indicator of market trends, has risen to around 3,000 from last month and is showing signs of recovery, it is still well below the average level (5,000 to 6,000). Ham Young-jin, head of Woori Bank’s Real Estate Research Lab, said, “Given that prices are adjusting in Seoul and the metropolitan area due to strong consolidation and a backlog of unsold properties in regional areas, it correctly judging the total. atmosphere as a wait-and-see approach.” “The condition can continue,” he concluded.
Some argue that because deregulation has become almost impossible, the timing of interest rate cuts, another key variable in the real estate market, is important. As the US shows solid consumption and industrial production, there is a high possibility that the base interest rate cut will be delayed longer than previously expected. In fact, four out of 10 global investment banks postponed their forecasts for a US Federal Reserve key interest rate cut by one month this month. The forecast for the US base interest rate at the end of this year increased from 4.41% on March 11th to 4.7% on the 8th of this month. This means that expectations about the extent of interest rate cuts have also fallen. Choi Hwan-seok, head of Hana Bank’s Real Estate Investment Advisory Center, predicted, “If the timing and trend of interest rate cuts do not meet market expectations, this could have the effect of increasing the wait-and-see attitude.”
Easing transfer and acquisition taxes or easing rebuilding regulations aimed at reviving local markets is also difficult. However, since the opposition cannot ignore the need to rebuild the new city first, there is also advice to avoid unconditional pessimism.
For now, it is very likely that the concentration in popular areas, including Gangnam, Seoul, will become stronger. Park Hap-soo, an adjunct professor at Konkuk University’s Graduate School of Real Estate, said, “The preference for new apartments will intensify,” and added, “The popularity of places like Banpo and Mapo, where there is a lot of new construction, is increasing .” Lee Sang-woo, CEO of Invade Investment Advisory, said, “Gangnam, Dongjak-gu, Mapo-gu, and Bundang area are worth paying attention to.”
There is a lot of advice to keep an eye on the long-term rental market and the housing supply situation. The opposition party, which won the general election, promised to provide tax support based on monthly rent and maintain the two rental laws (right to request contract renewal and monthly rent limit system). If these policies gain momentum, the jeonse market may shrink and jeonse volatility and sales prices may increase. If the government’s and ruling party’s housing supply measures, which focus on expanding private sector-oriented supply, are blocked by delays in revising the law, a housing supply cliff may be coming a reality in two to three years. Ko Jun-seok, a professor at Yonsei University’s Sangnam School of Business, said, “There is a high possibility that housing prices in the metropolitan area will tend to rise in the long term due to supply disruptions.”
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